This New York Life insurance review could save you from buying a life insurance product that you are not happy with down the road. Any time you are shopping for life insurance, it’s important to read into the companies and products you’re considering before you make a purchase.
New York Life is one of the most recognized insurance providers out there; however, there are some things you should know about the company before you buy one of their life insurance policies. Our goal in this article is to provide a thorough and well-researched New York Life insurance review that will help you make informed decisions as you are buying life insurance.
Quick Article Guide:
1. An Industry Giant
2. Financially Stable, But Not Without Controversy
3. Questionable Partnerships
4. Higher Rates Than Most
5. New York Life Term Life Insurance
6. New York Life Whole Life Insurance
7. Additional New York Life Offerings
8. Shop the Market
Founded in 1845 and headquartered in New York City, New York Life is the largest mutual life insurance company in the U.S. and one of the largest life insurance companies in the world. The company offers coverage in all 50 states, and manages more than $550 billion in assets.
New York Life’s distinction of being a mutual company means the company is owned by its policyholders, whereas a stock company is owned by investors. While smaller mutual companies can have difficulty raising capital, New York Life obviously does not have that problem. Like many other age-old mutual insurance companies, New York Life uses “mutual” to convey a sense of togetherness with consumers. The New York Life website reads:
“As a mutual company owned by our clients, we hold ourselves to the highest standards of transparency, objectivity, and integrity. For you. For us. Without fail. We’ll always aim to provide up-to-date information about the operations and actions of our business—which, when you’re a participating policy owner, really is your business.”
In the same vein, another line reads, “Because we’re owned by our clients, not Wall Street.”
One thing that we really like about New York Life is that they specialize in life insurance, and do a great job of simplifying their products for consumers. On their website, you can actually fill in a sentence that reads, “I am [age] and care about [my family and home, enjoying retirement, etc].” They will then instantly pull up a nicely designed page with their recommendations based on your responses. Unfortunately, however, this is about as far as our praise of New York Life will go.
Before we get into our cut-and-dry New York Life insurance review, we want to make it clear that we are not in any way bashing the New York Life brand. We are simply doing our job as independent agents to provide consumers with the information they need to find affordable, reliable life insurance.
New York Life is A++ rated by A.M. Best, an indicator that the company’s financial strength is “superior.” Typically, an A++ rating means that you can expect the insurer to pay a claim quickly and without hassle. But, there’s more than meets the eye when it comes to New York Life. The company has been subject to quite a bit of controversy and consumer complaints.
New York Life has been sued in California and New Jersey for unethical sales practices and refusal to pay death benefits on life insurance policies. In 2013, the company was drawn into a lawsuit against an alleged Ponzi schemer in Indiana. Most recently, New York Life settled a 401k lawsuit for $3 million in New York after what InvestmentNews described as allegedly using “an expensive proprietary fund to enrich itself at the expense of plan participants.”
We’re not going to go into the weeds of any of these lawsuits. Our point is only to illustrate that New York Life has had more run-ins with lawsuits than other top-rated insurers. Additionally, there have been New York Life employees who issued complaints of high-pressure sales tactics, poor salaries, and even multi-level marketing, which is built on selling to friends and family members. A fellow independent life insurance agent, Goldman Insurance Agency, shines a light on New York Life’s poor standing with the Better Business Bureau, writing:
“Although New York Life Insurance Company is not an accredited company through the Better Business Bureau (BBB), the company has been given a grade of B+ through the BBB. This is on an overall grading scale of A+ through B.
The company, over the past three years, has closed out a total of 104 complaints through the Better Business Bureau. Of these total 104 complaints, 60 have centered on problems with the company’s products and / or services, 20 focused on advertising and / or sales issues, 17 focused on billing and / or collection issues, and seven focused on delivery issues.”
We will add that a B+ might be a good rating in many books, but not where the lowest grade possible is a B.
Even with many complaints and lawsuits, the most worrisome aspect of New York Life isn’t necessarily their name, but who they lend their name to. New York Life is essentially the engine behind AARP’s life insurance program. AARP is actually one of the lowest rated life insurers out there and has accumulated hundreds of consumer complaints on sites like Consumer Affairs and Pissed Consumer.
The problem with AARP is that their rates increase tremendously as you age, and there is a lot of fine print in their policies. Many AARP customers end up uninsured because they are not able to afford the policy they purchased. See our AARP life insurance review for more insight into this sad truth. Otherwise, here’s an excerpt from the article that is relevant to New York Life:
“AARP and New York Life have come under a lot of scrutiny for the structure of their rates. Most life insurance policies on the market offer some type of guaranteed period. In other words, most insurance companies will allow you to lock in the price of your life insurance so that it does not increase as you get older. A guaranteed universal life policy will usually offer guaranteed rates to age 90 or later. Whole life rates can be guaranteed to age 100 or later, while term life can be guaranteed for 10 to 30 years.
The policy AARP offers does not work this way. The rates start low, but every five years, they increase. A lot of consumers are roped in by such a low starting price, but as you get older and life insurance becomes harder to pay for, your rates increase. In the life insurance industry, this is considered, “pricing you out of your policy.” Typically, people will sign up for these polices a few years before they retire, and when they need the coverage the most, the rates start to skyrocket. This is a huge challenge for someone on a fixed income. How much do the rates increase? Currently the rates advertised for a 54-year-old male will QUADRUPLE by the age of 70.”
Many “big-box” insurers like New York Life carry a large ad spend, which can eventually trickle down to consumers. We can’t confirm that’s what’s happening with New York Life, but we will say that the company’s life insurance rates run about 30-40 percent higher than many other insurers. If you’re looking for affordable life insurance, New York Life might not be the best option. Be sure to shop around before you buy a policy.
New York Life offers term life insurance in 10-, 15- and 20-year terms with an option to convert to a permanent policy. The company explains:
“Term life insurance is the simplest way to protect loved ones now—and lock in your lowest available rates for a set period of time. As long as you keep your policy active for a set “term” (like 10, 15, or 20 years), it can replace your lost income, tax-free, in the event of your death. Plus, you can add more coverage or upgrade to a permanent policy later.”
For additional information on term life insurance, click here.
True to its name, whole life insurance lasts for your whole life. These policies usually come with a “cash value” component that acts as an investment attached to your life insurance policy. New York Life does a good job on its website of explaining the benefits, risks, and nuances in whole life. Understand that with the lifetime protection and fixed premium, whole life insurance is generally much more expensive than a term life policy.
Again, the common theme in all of these is that they cost more with New York Life than with other, equally and perhaps even more reputable insurance companies. Universal life insurance can also shift the risk to you, the consumer, especially in the case of a variable policy. Some consumers report that New York Life agents can be very pushy; don’t let one of them talk you into a policy that you do not fully understand! For more information on the risks involved with universal life insurance and how to mitigate them, click here.
If you’re looking for help with finding the right life insurance policy for your needs, it’s best to go to an independent agent like JRC. We have no personal bias against New York Life, and will certainly assist you with securing one of their policies if it turns they are the best fit for you. Meanwhile, you get the added benefit of an expert who will shop 40+ top-rated carriers on your behalf to be sure you find the best coverage at the best rate.
Why be a mere sale to a big company like New York Life when you can be a valued client to an independent agent like JRC? Click the button below to receive an instant quote, or call us toll-free at 855-247-9555 to speak with one of our licensed agents today.